Doty could block TV payments and award money damages

Posted by Mike Florio on March 2, 2011, 3:42 PM EDT

Several of you have asked for an explanation regarding the next steps in the lockout insurance case. The easy answer (for us) is to tell you that you should have watched the opening segment of today’s ProFootballTalk Live, and that you still can.

The harder answer (for us, since it requires typing) is to spell it out right here.

Judge Doty has ordered another hearing because the two sides previously had been focused on the question of whether the CBA was violated by the league’s renegotiation of the broadcast deals to include and/or beef up language ensuring that the billions in rights fees would flow in the absence of football games being played. With a violation established, the question becomes how to fix the situation.

In most pieces of civil litigation, a prevailing plaintiff gets an award of money. In this case, the monetary damages would be calculated by determining the amount of money that the league left on the table when insisting on “lockout insurance,” and then by giving the players 59.6 percent of it.

Another related possibility would be to determine the actual cash value of the lockout insurance, and to require the league to give the players 59.6 percent of it.

The union will prefer an order preventing the money from being paid, or alternatively paying the money into escrow. If the league won’t be getting the use of the money during a lockout, the better approach would be to not have the money paid out at all, in order to avoid the requirement to pay interest on it later.

It’s also possible that Judge Doty will both block the TV money and order payment of 59.6 percent of the money that the league left on the table. Judge Doty’s ruling illustrates a wilful and deliberate violation of the league’s duty to use good faith and best efforts to maximize shared revenue, with the league securing instead of the highest possible rights fees a term aimed at helping the owners and hurting the players. Judge Doty reasonably could conclude that the NFL won’t be permitted to reap the rewards of its strategy — and that the players should be compensated for the league’s failure to get top dollar for the bundle of rights.

The league would contend that such an approach represents something more than compensation, since the penalty would include paying the union for obtaining lockout insurance in lieu of maxing out revenue and then preventing the league from having the benefit of the lockout insurance. It’s possible, however, for Judge Doty to tie two remedies to arguably separate aspects of the CBA violation.

First, Judge Doty could find that the NFL violated the CBA by failing to get the most money possible in rights fees. Second, Judge Doty could find that the NFL violated the CBA by using its cooperative relationship with the union to finagle a term that helped the owners at the expense of the players. Thus, it possibly makes sense both to make the players whole and to prevent the league from receiving the money.

The union would likely be (and should definitely be) happy to get only an injunction against the payment of the TV money, since that would keep $4.3 billion out of the league’s war chest.

Of course, and as Albert Breer of NFL Network pointed out in his Wednesday visit to ProFootballTalk Live, the league undoubtedly will appeal Judge Doty’s decision to the federal appeals court with jurisdiction over Minnesota. That process could take months; surely, the money from the networks at a minimum will be held in escrow until the appeal is resolved.

Bottom line? Once the league processes the impact of the ruling, the league should get serious about working out a fair compromise, taking into account the diminished leverage resulting from Tuesday’s ruling.

The other possibility being that Old Dotty dies of natural causes at an advanced age, sometime between now and the opening of training camp.

prior0knowledge says:Mar 2, 2011 3:49 PM

What about a solution that if there is a work stoppage, then the league is required to share 59.6% of the money it receives from TV with the union? That way both sides have benefited from the deal the NFL struck with TV. There are no damages. Everybody is made whole.

I disagree with Doty’s decision. The NFL made a business decision that protected them in the event of a lockout. The players don’t have the right to tell the NFL how to conduct their business. What if the NFL decides to expand overseas and it fails, causing the league to lose money? Would the players be able to sue because the NFL made a bad business decision? Of course not. Like it or not, the players are contract employees, not owners.

brownsfn says:Mar 2, 2011 4:02 PM

Where was this guy when the UAW was fighting for its workers lives against Delphi????

dolphan343 says:Mar 2, 2011 4:03 PM

Wasnt last year capless? The players werent guaranteed 60% then were they, having no salary floor? Next, when were these television deals negotiated? 2009?

Uh, why should the studios win on the deal? If anything, the money should still go to the NFL, who would then be ordered to repay the NFLPA for lost shared revenue the union and it’s players would have been entitled to.

I can’t imagine the NFL gave up $4 billion in television contract revenue in order to negotiate a $4 billion payout they may not ever see. You wouldn’t pay for insurance on something if the insurance costed the same or more than the out of pocket expenses.

The only other damages the NFL could be responsible for is potential deceptive business practices.

This whole thing is just a grease fire.
I’m quickly starting to not care if they play next year or not.

CKL says:Mar 2, 2011 4:14 PM

I could be wrong but didn’t the NFL have to give a couple of the networks some “pot sweeteners” such as providing access to some content for their online partners (cell phone network maybe) in order for them to give the NFL the “lockout insurance” or loan?

I think it would be very difficult to ascertain the value of those “pot sweeteners” right now vis a vis this deal because any decision made on the value of the “lost” revenue alone would have even more variables. The value of the pot sweeteners can’t even be determined as of yet since they were so recently provided and the 2011 season hasn’t commenced yet so they don’t have any past #s even to base a projection on as far as I can tell (unless they have figures from 2010 maybe?)

Either way, I think the timeliness of the decision is more important here due to the possible effect on the ongoing negotiations than maybe in a normal lawsuit with punitive damages so perhaps they could hold the money in escrow, & let the owners’ “punishment” be the interest they have to pay on money they can’t even use or something like that.

“Judge Doty reasonably could conclude that the NFL won’t be permitted to reap the rewards of its strategy — and that the players should be compensated for the league’s failure to get top dollar for the bundle of rights.”

—-

So he could punish the NFL for not squeezing every drop possible out of the TV networks? This is a PERFECT example of my problem with this country’s judicial system. If he’s allowed to do this, then why aren’t the owners allowed to bring lawsuits against players claiming they didn’t try hard enough to win and the result was poor ticket sales? In that instance the players are not bringing in the max revenue possible either.

I don’t see ANYTHING good coming from punitive damages being awarded in this case. I see a judge slapping the league in the face and the league picking up all its toys and deciding not to share with the players anymore. If all the laws protect the players and NONE protect the owners’ investment, what’s the benefit to operating this way? All the teams should separate, form each as its own corporation (removing a unified front for a anti-monopoly lawsuit) and drive the prices for players WAY down. That would be the smart thing to do. They can just choose to agree on a CBA of playing rules only…nothing to govern business financial operations. TADA – no monopoly, no lawsuit, no salary cap…a few high-price clubs and a bunch of average-pay clubs…hello, baseball, but without the top-down management!

hobartbaker says:Mar 2, 2011 4:20 PM

Each morning Mrs. Doty pins the card on David’s suit carefully, with his name, address, and home telephone number on it. In case he becomes confused on the subway or falls down.

how about if there is a stoppage take 75% of the tv money and give scholarships to under priveleged high school students

rpiotr01 says:Mar 2, 2011 4:27 PM

All well and good, but to what end? The structure of the current CBA needs to be changed, a correction has to be made. There won’t be labor peace without it, regardless of Judge Doty’s decisions. Even if this decision means the owners cave completely this year, they’ll be right back at it in 2-3 years time.

For the long term good of the game, the players need to give back and the owners need to be reasonable in not asking for too much. A hard balance to strike, of course, but in this situation neither side should come away completely happy.

abshire22 says:Mar 2, 2011 4:32 PM

Once again the league needs to get serious and the union should just sit back and take what they want in negotiations. Why does every one of your solutions come down to the league needing to work out a “fair” compromise and the union seemingly has no need to give anything?

if i was the owners and lost the money to escrow or couldn’t use it, i’d make sure and stick it to the players and bring them down to employee status. This is how unions ruin companies they are involved in any business decision but bear none of the business risk.

I’m still laughing at chapnastier submitting post after post after post railing against unions all day long, only to have him finally admit he did all this while he was at work. Too funny.

The lesson here kids is, unions are evil, but it’s OK for you to screw the guy that pays your wages every chance you get.

oldbrowndawg says:Mar 2, 2011 4:54 PM

What a shame that pro football has come down to lawyers, judges, greedy unions, and out-of-touch owners. Really takes the fun out of watching the sport.

bonniebengal says:Mar 2, 2011 5:10 PM

I’m wondering at what point it is no longer profitable to be an NFL owner. Now the owner of a business has to share all of their profits equally with the workers? At some point it is no longer profitable to own the business.

You mentioned some time ago that Doty would no longer have jurisdiction under certain circumstances……… can you explain what they were again?

I’m betting the owners will do whatever it takes to make sure his authority (and one-sided rulings) ends this year!!

schemefactory says:Mar 2, 2011 5:19 PM

screw it, lets just have the owners suit up and play! i’d like to see the packers 20,000 or so shareholders gang-tackle the likes of dan snyder, al davis, and whichever brown is screwing up the bengals these days.

east96st says:Mar 2, 2011 5:21 PM

“I’m still laughing at chapnastier submitting post after post after post railing against unions all day long, only to have him finally admit he did all this while he was at work. Too funny.”

It was a beautiful, sunny day in Dallas, so the drive thru window was slower than usual.

hobartbaker says:Mar 2, 2011 5:25 PM

Doty has been a union guy ever since his days of riding the rails with Woody Guthrie and singing songs about Joe Hill.

I like what a union is SUPPOSED to be. An organization of workers that are moving to fair work (decent pay, neccessary benefits, insurance) I DO NOT like what SOME unions have become. A bunch of greedy bastards that want six times the pay their work is worth and every now and then decide to hold the company hostage. Not referring to the NFLPA here, just saying.

The Union and Owners signed a contract with the CBA. The players gave up the rights to things (such as exclusive rights to their NFL jerseys #’s, NFL game images, etc . . . ) that are exclusively sold through the NFL. The concessions they got from the owners for these things, among other things, was the requirement the owners maximize profit. The owners didn’t do this when they got the lockout insurance in leau of additional funds, so they breached the contract.

For all these people comparing themselves to NFL players as employees, I doubt you could get any money for your image in a work uniform. The CBA allows the NFL to set a flat rate for player compensation, otherwise each team would have to negotiate with each player for each exclusive right. I would LOVE to see those contracts.

Just because you don’t like it doesn’t make the contract wrong. Start paying whatever you like on a mortgage and see how that works out for you; the judge will point to your contract and your signature and say you agreed to this.

thefiesty1 says:Mar 2, 2011 5:47 PM

Deceptive business practices?? This whole thing is deceptive. Hit them all in the pocketbook and they will “see the light” and come to an agreement.

If the owners get so greedy that they end up killing the golden goose, that’s their own fault. This is a $9 billion dollar business. And you are trying to tell me that the owners are going broke? BULLCRAP! They have money. Their NFL teams are not defaulting. They are not going broke. Now maybe their other enterprises are failing. But not thier NFL teams. Why do the players have to give up money to support Kraft’s failing investments, Snyder’s failing companies, or the Glazer’s failing shopping malls?

Majority of Americans out there are struggling to pay their mortgages. Some people are struggling to find a job. No one is going to feel sorry if Jerry Jones has to cut back his expenses and lifestyle in order to pay for his stupid billion-dollar stadium.

sudzy11 says:Mar 2, 2011 6:24 PM

The bottom line is that Judge Doty has leveled the playing field for negotiations. Just like some players have money set aside and some don’t, I am sure that the same thing is true about some of the owners. The owners without other cashflow will be the ones pushing for a deal. It may not be by March 4 but I predict they will announce an extension.

If I ran the NFL I wouldn’t treat the players as partners to begin with. The players are expendable, and they should be thankful there even is an NFL to begin with. Without the NFL most of the players would be working as plumbers, driving beer trucks, or would be serving time in prison. They should feel lucky for the opportunites the NFL has provided for them and stop being so greedy for more. Take away the owners and there is no NFL. The players should realize that and be thankful for the wonderful living the owners and the fans have provided for them. This player’s union is a joke. The players have nothing in common with the average worker in this country who has to scrape out a living check to check. People who deal with real greivances and issues on a day to day basis. People who have more to deal with in life than figuring out what’s my percentage of billion dollar deals. I find this sense of entitlement from the players insulting, and I find the way the media is portraying the players as some simple workers being persecuted by management is pathetic and insulting to my intelligence.

alexanderisland says:Mar 2, 2011 7:11 PM

I have my doubts about the application of the ruling.

I do agree that it is the League’s fiduciary duty to maximise the revenue for their ‘partners’, but only up to the end of the CBA – after that it is every party for themselves. Why is the judge punishing the NFL for negotiating their lockout insurance for the season after the CBA and (ahem, burp, nod, fart) AFTER the fact that he becomes completely irrelevant in the proceedings between union and league??

Bad call on the Judge’s part. Totally biased. The NFL increased the revenue from the previous TV deal, so he can’t say that there was negligence from the NFL’s part. That the NFL, and NFL alone, has to pay the interest on the ‘loan’ after games resume has nothing to do with him or his ruling, seeing that the CBA will have expired when this comes into play.

pappysarcasm says:Mar 2, 2011 7:47 PM

His Honor has now guaranteed that the owners will dig in, and refuse to sign any deal that includes Judge Doty, or the words “Revenue Sharing” or “Partnership”!

Well done dillweed!

alewatcher says:Mar 2, 2011 8:24 PM

emperor83 says: Mar 2, 2011 5:26 PM

I like what a union is SUPPOSED to be. An organization of workers that are moving to fair work (decent pay, neccessary benefits, insurance) I DO NOT like what SOME unions have become. A bunch of greedy bastards that want six times the pay their work is worth and every now and then decide to hold the company hostage. Not referring to the NFLPA here, just saying.

Totally agree. I worked for 10 years in computer field service, mainly at a very large union plant ( a company everyone knows), and saw first hand the union business plan. Basically, do as little work as possible, and get paid as much as you can. (Sounds like some NFL players, doesn’t it?) File grievances any time someone does actual work that they are not supposed to do, even if it’s the right thing to do, and saves the company time and money. (Had a few grievances filed against me for doing my own job as it needed to be done.) Go on strike every three years (UAW, I’m lookin’ at you), and watch as more of your union “brothers” got laid off. I watched a plant go from 7,000+ workers to less than 3,000 in three years. It’s a sad thing to see.

(Funny note about one grievance: After getting a grievance filed against me for doing my job, four union electricians signed off on the job I got in trouble for on C shift at 3:00 AM. Four hours each, for what took me 1/2 hour. (Yeah, they all got suspended;-)

hockeygoalie29 says:Mar 2, 2011 9:49 PM

While I definitely agree with the ruling in the case, trying to assess a penalty is going to be very hard to do. It seems to me that any ruling on potential penalty to the owners, whether it be blocking the payments from the networks to the league and/or awarding monetary damages to the players, is going to be based on pure speculation as to how much damage was actually caused and therefore very susceptible to appeal.

After thinking about it, a fair punishment to me would be twofold:

1) Compensating the players for damages by awarding 59.6% of whatever amount is determined to have been cut from revenue in 2009 and 2010 to secure the so-called “lockout insurance.” Plus interest. This one is a no-brainer. The players were shortchanged the last two years by the owners deceitful tactics and are rightfully owed whatever money they were cheated out of.

2) Ensuring that ownership does not benefit from any terms generated from dealing in bad faith by preventing the payment from the networks in the case of a lockout.

To me, any potential penalty that does not include the 2nd term would amount to a victory for ownership. If the players are simply awarded a monetary sum payed by the owners then the owners are still benefiting from acting in bad faith by being allowed to keep the lockout insurance terms in the network agreements. The owners would gladly pay out “damages” to the players for the right to keep their lockout fund and not blocking those terms from the deal would do nothing to discourage the owners from attempting to deal in bad faith in the future.

rlr79 says:Mar 3, 2011 12:40 AM

What the league should do is have Paul Allen owner of the Seahawks lend the money needed to pay the bills of all the franchises that do not have the money to cover the bills until they get the deal they are looking for. He could do it low interest and the money could be slowly paid back, when the league starts back up again when the players finally get what they deserve and not this well over paid crap they get now 60% revenue is highway robbery. I am no fan in anyway of unions, I am damn proud to say I’ve never been in one, and will never be, all they produce is lazy workers that they protect, and make life harder on the workers that want to work. But I especially can’t stand the players union either in baseball, football, or basketball and I only hope that the owners of these sports finally grow the balls needed to crush those unions.